I am an award-winning journalist and a New York Times best selling author. My latest book is Newton's Football: The Science Behind America's Game, published by Ballantine in November 2013. My other books include The Billion Dollar Game: Behind the Scenes at the Super Bowl and Clapton's Guitar: Watching Wayne Henderson Build the Perfect Instrument. For five years I wrote the By the Numbers sports analytics column for the Wall Street Journal. I have written about sports, music, entertainment, pop culture and politics for a wide variety of national publications including The New York Times Magazine, Salon, Rolling Stone, Men's Journal, The Daily Beast, The Washington Post and The Village Voice. I'm a graduate of The University of Chicago and I live in Montclair N.J. with my wife, two kids, and my golden retriever, Tessie.
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What Would LeBron James Be Worth In A Free Market NBA?

It is a moment of great uncertainty in the NBA, but there’s one sure thing. No matter where he signs, LeBron James will be underpaid. Drastically. Which is exactly what makes him the most valuable single player in the sport–and perhaps all of sports.

What would James be worth in a true open market and how does that compare it to what he’ll actually make? A lot, and a lot more.

But before I get to the numbers, let’s talk briefly about the economics of elite players in the NBA, and how a player like James can be a championship-winning bargain.

The NBA is governed by a salary cap which determines how much each team can pay its players. The system is so complex that teams actually employ “capologists” to allow them to find the loopholes in salary cap system, so a full discussion of the cap is a book-length subject.

But to understand Lebron’s appeal, you need to understand one thing: salary cap not only limits how much a team can pay its whole roster, it also sets a limit on how much a team can pay its players, aka “max” players.

Entering last season there were 16 players in the league who signed the maximum allowable deals, not including LeBron or Chris Bosh or Dwyane Wade who all signed “near max” deals in 2010 to fit under Miami’s salary cap. The “max” scale slides on the basis of several factors: a player’s tenure in the league, the amount he made on his previous contract and whether he re-signed with their previous team or jumped to a new one. That’s why Kobe Bryant made a whopping $$30,453,805 this season (although he took a raise that left him slightly short of a max deal.) And why Joe Johnson of the Nets was able to sign a $123 million deal averaging $20.6 million per year, while league MVP Kevin Durant makes only $17.8 million.

Under the current cap rules, James can sign a contract worth around $20.7 million annually.

But what’s he really worth? To get a sense of this, I combined two stats. The first is Win Shares, which takes a player’s on-court value and translates it into “wins.” James has been the league leader in win shares five of the last six years, finishing just behind Durant this year. To translate win shares into money, multiply a player’s win shares by $1.65 million, the current “price per win” in the NBA. Call that number “Real Value”

Over the last six years James averaged 17.3 win shares. Multiply that by $1.65 million, and James’ “True Value” is a hefty $28.45 million.

This gap between James’ salary and his value is why a mid-career superstar like James is the only real bargain in the league. A modestly talented player, like Jeremy Lin, can test the market until he finds a team that will pay him what he’s worth, or even over pay him. But the rules prevent a team from, say, offering half of a team’s salary cap to a single player.

But James and a small handful of other mid-career superstars are simply worth lots more than any team can pay them under the salary cap. Securing a player like that makes a team an instant contender. Durant has a career win-share average of 15.7 which puts his True Value at $25.9 million. His salary on his recent “max” contract averages only $17.8 million, and the Oklahoma City Thunder are the beneficiaries of that gap.

But it’s a small club. Just behind James and Durant in average win shares is Chris Paul. He’s averaging 13 win shares per season which puts his True Value at $21.53 million. His maximum deal? $21.46 million.

Don’t think that the the season’s other major free agent will be a bargain for the team that signs him. Knicks’s forward Carmelo Anthony has put up an average Win Share of 7.86 over the last six years, which is solid but less than half of James’ value. Multiply Melo’s win shares by that $1.65 million cost per win and it translates into a True Value of $12.98 million. Given that Anthony can sign a five year $129 million contract with the Knicks at an average salary of $25.8 million, you can see how max players can end up being not only drastically underpaid, but drastically overpaid as well.

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